Immediately following the 29.3.2022 Federal Budget (viz: on 30.3.22) the Government introduced legislation to enact the taxation, levy, tax refund and other social security measures announced. The Bills are the Treasury Laws Amendment (Cost of Living Support and Other Measures) Bill 2022 and 2 accompanying Bills – the Excise Tariff Amendment (Cost of Living Support) Bill 2022 and the Customs Tariff Amendment (Cost of Living Support) Bill 2022. The Bills were ‘waved’ through both houses on the same day (30.3.22) and received Royal Assent, the next day (31.3.22).
Halving the fuel ‘excise’ for 6 months
The Explanatory Memorandum describes the changes (in the Excise and Customs Tariff Bills) this way.
Current law – The Excise Tariff Act imposes excise duties on the manufacture and production of fuels, including petrol and diesel and similar petroleum-based products, including oils and grease in Australia. Fuel excise duties are subject to indexation in February and August each year (generally on the first of the month) at the CPI-indexed rate.
New Law – From 30 March 2022, the excise duty rates on fuels, including petrol and diesel and similar petroleum-based products, including oils and grease are reduced by 50 per cent for a period of 6 months until 28 September 2022 (inclusive). From 29 September 2022, the fuel excise duty rates automatically return to the full rates and apply as if there had not been a temporary reduction in excise duty rates. These changes do not affect current ongoing indexation arrangements, although indexation in August 2022 applies to the reduced duty rate.
The Customs Tariff Act imposes excise-equivalent customs duty rates on the importation of all fuels including petrol and diesel and similar petroleum-based products, including oils and grease into Australia. Fuel excise-equivalent customs duty rates are subject to indexation in the same way as the ‘excise’ duty.
The ‘main’ (Treasury Laws Amendment) Bill
Schedule 1 – Medicare Levy related
Schedule 1 to the main Bill amends the Medicare Levy Act 1986 and the A New Tax System (Medicare Levy Surcharge — Fringe Benefits) Act 1999 to increase:
- the Medicare levy low-income thresholds for individuals and families (along with the dependent child/student component of the family threshold) in line with movements in the CPI;
- the Medicare levy low-income thresholds for individuals and families eligible for SAPTO (along with the dependent child/student component of the family threshold), in line with movements in the CPI; and
- the Medicare levy surcharge low-income threshold in line with movements in the CPI.
Date of effect – This measure applies to the 2021-22 income year and later income years.
Schedule 2 – Deductibility of COVID-19 tests
Schedule 2 to the main Bill amends the ITAA 1997 by allowing an income tax deduction for taxpayers who incur relevant COVID-19 testing expenses in gaining or producing their assessable income. The deduction applies to relevant expenses incurred on or after 1 July 2021. Employers that provide relevant COVID-19 testing to employees in the course of their work will not incur an FBT liability.
Date of effect – The amendments to the ITAA 1997 apply to losses and outgoings on or after 1 July 2021.
Schedule 3 – New ‘deductible gift recipients’
The following will be designated as DGRs:
- Royal Humane Society of New South Wales Incorporated (from 1 July 2020);
- Perth Korean War Memorial Committee Incorporated (from 1 July 2021 to 30 June 2024);
- Greek Orthodox Archdiocese of Australia Consolidated Trust Cathedral of the Annunciation of our Lady Restoration Fund (from 1 July 2021 to 30 June 2024);
- The Australian Future Leaders Foundation Limited (from 1 July 2021);
- Lord Mayor’s Charitable Foundation (from 1 July 2021); and
- The Ramsay Centre for Western Civilisation Limited (from 1 July 2021).
Schedule 4 – Employee share schemes
The Bill will enact a range of the Governments’ previous announcements on ESS’s. Notably this includes removing cessation of employment as a taxing point.
It also includes changing the investment thresholds for unlisted companies, ie where employers make larger offers in connection with employee share schemes in unlisted companies, participants can invest up to:
- $30,000 per participant per year, accruable for unexercised options for up to 5 years, plus 70% of dividends and cash bonuses; or
- any amount, if it would allow them to immediately take advantage of a planned sale or listing of the company to sell their purchased interests at a profit.
The Bill also removes a number of regulatory requirements, all in the stated aim to make it easier for businesses to offer ESS’s. See related TT Article.
Schedule 5 – PAYG and GST instalment uplift factor: 2% for 2022-23
Schedule 5 to the main Bill amends the TAA 1953 to reduce the GDP adjustment factor for the 2022-23 income year to 2 per cent. The GDP adjustment factor is applied by the Commissioner to work out the amount of PAYG and GST instalments payable by a taxpayer in certain circumstances.
Schedule 6 – LMITO changes
Schedule 6 to the main Bill amends the ITAA 1997 to increase the low and middle income tax offset for the 2021-22 income year by $420 to ease cost of living pressures for Australians. Note that the low income tax offset (LITO) is unchanged.
Date of effect – The amendments to the low and middle income tax offset in Schedule 6 to the main Bill apply to the 2021-22 income year.
Schedule 7 – Safety Net Thresholds
There are two Pharmaceutical Benefits Scheme (PBS) ‘safety net’ thresholds – concessional and general. The general patient safety net threshold is currently $1,542.10, which equates to approximately 36 general patient co-payments. The concessional safety set threshold is currently $326.40 which is the equivalent to 48 concessional patient co-payments.
The purpose of Schedule 7 to the main Bill is to amend the National Health Act 1953 to lower the PBS safety net thresholds for the concessional safety net to 36 scripts (from 48) and general to $1457.10 (from $1542.10) on 1 July 2022.
Date of effect – This change will come into effect on 1 July 2022 and will apply to any concessional and general patient safety net thresholds on that date.
Schedule 8 – 2022 cost of living payment ($250)
Schedule 8 to the main Bill provides for the payment of 2022 cost of living payment of $250 to around 6 million Social Security and Veterans’ income support and compensation recipients, Farm Household Allowance recipients, and holders of a Pensioner Concession Card, Commonwealth Seniors Health Card or Veteran Gold Card.
To be qualified for the 2022 cost of living payment, a person must be residing in Australia and be receiving one of the qualifying payments or hold or have claimed and qualified for one of the qualifying concession cards on 29 March 2022.
Date of effect – Schedule 8 to the main Bill commences the day after the main Bill receives Royal Assent.
[Tax Month – March 2022 – Previous Month, 2.4.22]